Advance tax collections rise 6% in FY26 despite fall in non-corporate taxes

Even after de-growth in mop-up from non-corporate tax (NCT) assesses, advance tax collection, after all the four instalments, rose by over 6 per cent during the current fiscal year, data from the Income Tax Department showed on Wednesday. Experts feel that though revised estimates for FY26 are likely to be met, the coming months will see the impact of the West Asia war.

Advance tax growth slows compared to last year

Growth in collection from all 4 instalments of advance tax during FY25 was over 14.6 per cent. Non-corporate includes taxes paid by individuals, HUFs, Firms, AoPs, BoIs, Local Authorities, and Artificial Juridical Persons.

Corporate taxes hold up, NCT declines

Data from CBDT showed that advance tax collection from corporates grew by around 9.5 per cent, while that from NCT declined by around 2 per cent. This could be due to the rate revision during the current fiscal year. “While the growth in advance tax for corporate taxes appears relatively healthy, we are watchful of the unfolding impact of the West Asia crisis on availability and pricing of inputs as well as profitability in certain sectors,” Chief Economist, ICRA Ltd, said.

Direct tax collections remain steady

Meanwhile, overall net direct collection recorded growth of over 7 per cent, with double-digit growth in corporate tax but below 3 per cent in NCT. According to an tax expert, personal income tax collections are progressing at a more moderate pace, as the impact of recent rate revisions will take additional time to fully filter through. Overall, “the current trajectory suggests that the Revised Estimate for direct tax collections ₹24.2 lakh crore is likely to be achieved,” he said.

Refund payouts contract

From April 1 to March 16, growth in refund payouts was negative. “Refunds continue to show contraction over the previous year, primarily driven by automated scrutiny designed to reduce fraudulent claims. Corporate advance taxes show a positive growth signalling higher earnings on the back of economic growth. Non-corporate taxes are still reeling from the rate cut provided to individual taxpayers last year,” an tax expert said.

Source from: https://www.thehindubusinessline.com/economy/advance-tax-collection-grew-by-642-in-fy26/article70759159.ece